Meet the Two Grad Students Who Freaked Out the NYT–The Pulse iPad App Creators Speak!

The first thing to strike you about the pair of Stanford University graduate students (pictured here) who made the banned and then unbanned news-reading iPad app, Pulse News Reader, is how they look like an advertisement for all that is good about entrepreneurship.

BoomTown met Akshay Kothari, 23, and 22-year-old Ankit Gupta this afternoon at a hotel near the Worldwide Developers Conference in San Francisco, where Pulse was called out yesterday by name by Apple (AAPL) CEO Steve Jobs for excellence only hours before the company had to stop offering it to users.

At first, the shy pair said they did not want to call attention to themselves or rail on Apple or the Times. After much convincing by me, they agreed to talk about their unusual situation in the video below, focusing on the product and its origins.

It started out simple enough, creating Pulse for the Launch Pad class at Stanford, which requires students to develop and put out a product. Both students are at Stanford’s Institute of Design and created a company called Alphonso Labs when Pulse was done.

It took them only four weeks to develop and, within weeks after it was approved for sale in the App Store, Pulse became a red-hot paid seller for the fast-growing tablet device–putting Pulse at No. 1 at times on the list of paid apps on iTunes.

The high culminated for Kothari and Gupta when Jobs named Pulse first in a list of the most-promising apps for the iPad in his keynote speech at the WWDC yesterday.

Unfortunately, that was the last hurrah for them, since the business side of the New York Times–after seeing the article about Pulse in the Times–had already fired off a letter to Apple demanding that the app be taken down.

“The Pulse News Reader app, makes commercial use of the NYTimes.com and Boston.com RSS feeds, in violation of their Terms of Use,” wrote Times lawyer Richard Samson to Apple on June 3. “Thus, the use of our content is unlicensed. The app also frames the NYTimes.com and Boston.com websites in violation of their respective Terms of Use.”

Sources at the Times said that while there are many other similar readers for online news that do exactly the same thing, Pulse’s combined framing and use of the paper’s RSS feed for commercial gain–as well as, let’s be frank, its popularity–caused execs to make what looks like a pretty boneheaded move.

(Could they have called the pair first? Of course they could have, but they did not.)

So, after the Times lawyer wrote Apple, Apple wrote Kothari and Gupta, telling them of the removal of Pulse from the App Store: “The New York Times Company believes your application named ‘Pulse News Reader’ infringes The New York Times Company’s rights.”

A Times spokesperson said this might be a mistake and that the media giant did not know what had happened.

Neither did Gupta and Kothari, who said the app on sale now is the same as the old one, although they had submitted a new version without the Times as a default earlier today.

“It’s a mystery,” said Gupta. “Although it is sad that we were off the App Store right when people might have heard about us.”

The next step? Who knows?

UPDATE: Sources close to the situation said that the Pulse iPad app was reposted because the new version submitted earlier today does not automatically include the Times properties and that older versions sold will soon be updated.

Other sources also noted that the Times has had issues with many other third-party news readers in the past, though not one as visible as Pulse.

And it remains to be seen if Pulse’s creators face other irked content owners or not.

In any case, one thing is still certain: Like its creators, the innovative Pulse is sweet, and it is on sale for $3.99 at iTunes.

For now, that is.

Until the next twisty development, here’s the video interview of Kothari and Gupta:

[Photo by All Things Digital intern Drake Martinet–taken before the recent controversy.]

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